Have you come across a property for sale that you like but are unsure of entering the deal because it is a cross lease, and you don’t fully know what that might mean for you? Many others across the country are in the same situation as you. Hayman Lawyers wrote this blog to help you understand what this complicated form of property ownership means!
What is a cross lease?
When you purchase a cross lease property in New Zealand, you become a partial owner of each building on the land, not just your own. Your personal land is then leased from all the other owners, usually for 999 years. The contract sets out exclusive areas of occupation and shared common areas, such as driveways, garages, and garden areas, including their maintenance. This ownership is most common with townhouses and flats; however, it is less popular today with new builds. Before you purchase a cross lease property, ensure you check all flat and property plans and know all the limitations that will come with this type of ownership structure. It is crucial to see if the flat plan in front of you matches the property precisely and that there are no additions, such as conservatories or any renovations in progress. Similarly, when you are selling a cross lease property, it could take some extra time to settle all the contracts.
What do I need to be careful of
Cross lease ownership means that every owner has to consent on structural changes on the property and shared areas, such as a new fence or deck. The same goes for painting the exterior of your home. If you want to make the slightest changes on the outside of your building, you will need formal, written consent from the other owners, consent cannot be arbitrarily withheld, but this could make a renovation project complicated and take longer than with different property ownership types. If the structure doesn’t get approved and you go on with it, it could cause problems when you come to sell the property. In a cross lease ownership, it is essential to have a good relationship with all your neighbours, as this will help you in the situation just mentioned.
If you alter the outline of your building you will have to get the flats plan amended to reflect the changes. This will involve getting a surveyor and lawyer to lodge the paperwork.
You can do a title search on Land Information New Zealand (LINZ), which will confirm all the known facts about the property, including ownership, boundaries and common areas. Remember to compare it with any flat plans you got and with the property in front of you!
How we can help
If you decide to purchase a cross lease, make sure you get in touch with a specialist property lawyer, who can ensure that all flat plans are correct and align with your exclusive area. Hayman Lawyers have all the expert knowledge to support you in a cross lease property purchase or sale and are looking forward to helping you with your property journey.
Get in touch with our team today for a consultation and find out how our property law team can support you!
